Wp/29448/2015 Of Smt. Kavitha Rajakoti v. Income Tax Officer

*THE HON’BLE SRI JUSTICE G. CHANDRAIAHAND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAMWRIT PETITION No. 29448 of 2015 23.09.2015 Between: Smt. Kavitha Rajakoti, w/o V.D.Rajakoti,11/645, Srinivasapuram, Santhapeta, SPSR Nellore and --$ Income Tax Officer, Ward No.IV, 242438GNT Road, Dargamitta, Nellore and others … Petitioner … Respondents ! Counsel for the petitioner - Mr. S. Dwarakanath^ Counsel for the respondents - Mr. B. Narasimha Sharma, StandingCounsel < Gist: > Head Note: ? Citations: THE HON’BLE SRI JUSTICE G. CHANDRAIAH AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM ORDER:- (per Hon’ble Sri Justice Challa Kodanda Ram) This writ petition questions the order dated 07.08.2015passed by the 1[st] respondent rejecting stay of collection of tax,pending appeal before the 4[th] respondent, for the AssessmentYear 2012-13. 2. Heard Mr. S. Dwarakanath, learned counsel for thepetitioner, and Mr. B. Narasimha Sharma, learned StandingCounsel for the respondents. 3. The exemption claimed by the petitioner for the amountdeposited under the Capital Gains Account Scheme, underSection 54(2) of the Income Tax Act, came to be rejectedbythe 1[st] respondent/Assessing Officer. Further, the petitioner’sclaim for exemption on the amount paid after filing of the returnalso came to be rejected. The petitioner filed an appeal beforethe 4[th] respondent and the same is pending. Duringpendency of appeal, the petitioner filed an application beforethe Assessing Officer/1[st] respondent seeking stay of theimpugned demand, but the same came to be rejected. Incidentally, it is the same Assessing Officer who passed theAssessment Order. The stay petition came to be rejectedobserving: “The demand for the AY 2012-13 arose on account of wrong claim of deductions u/s 54 of the Act and thefacts were elaborately discussed in the assessmentorder. Hence, I am confident that the assessmentorder will be confirmed by the AppellateAuthorities.It is pertinent to mention here thatfiling appeal before the CIT(A) does not confer youfor stay of collection of appeal.(emphasis isours.) In view of the above, your petition for stay ofcollections is rejected and you are requested to clearoff the demand immediately, failing which coercivesteps will be taken for recovery of demand as deemedfit.” 4. A perusal of the impugned order does not reveal properappreciation of necessary considerations that are required tobe taken into consideration by the Assessing Officer when astay application is filed before him. The method and mannerof considering stay applications by the Assessing Officer,pending disposal of the appeal, are set out in the CentralBoard of Direct Taxes (CBDT) Instructions No.1914 dated02.12.1993. The relevant portion of the said instructions readas under: “C. GUIDELINES FOR STAYING DEMAND. (i)A demand will be stayed only if there are validreasons for doing so. Mere filing an appeal againstthe assessment order will not be sufficient reasonto stay the recovery of demand. A few illustrativesituations where stay could be granted are – (a)if the demand in dispute relates to issuesthat have been decided in assessee’sfavour by an appellate authority or courtearlier; orthat have been decided in assessee’sfavour by an appellate authority or courtearlier; or (b) if the demand in dispute has arisenbecause the Assessing officer had adoptedan interpretation of law in respect of whichthere exist conflicting decisions of one ormore High Courts (not of the High Courtunder whose jurisdiction the AssessingOfficer is working); or (c)if the High Court having jurisdiction hasadopted a contrary interpretation but theDepartment has not accepted thatjudgement.adopted a contrary interpretation but theDepartment has not accepted thatjudgement. (a)if the demand in dispute relates to issuesthat have been decided in assessee’sfavour by an appellate authority or courtearlier; orthat have been decided in assessee’sfavour by an appellate authority or courtearlier; or (b) if the demand in dispute has arisenbecause the Assessing officer had adoptedan interpretation of law in respect of whichthere exist conflicting decisions of one ormore High Courts (not of the High Courtunder whose jurisdiction the AssessingOfficer is working); or (c)if the High Court having jurisdiction hasadopted a contrary interpretation but theDepartment has not accepted thatjudgement.adopted a contrary interpretation but theDepartment has not accepted thatjudgement. It is clarified that in these situations also, staymay be granted only in respect of the amountattributable to such disputed points. Further,where it is subsequently found that theassessee has not cooperated in the earlydisposal of appeal or where a subsequentpronouncement by a higher appellateauthority or court alters the above situation,the stay order may be reviewed andmodified. The above illustrations are, ofcourse, not exhaustive. (ii) In granting stay, the Assessing officer may imposesuch conditions as he may think fit. Thus he maysuch conditions as he may think fit. Thus he may (a)require the assessee to offer suitablesecurity to safeguard the interest of revenue;security to safeguard the interest of revenue; (b) require the asessee to pay towards thedisputed taxes a reasonable amount inlumpsum or in instalments;lumpsum or in instalments; (c)require an undertaking from the assessee that he will cooperate in the early disposal ofappeal failing which the stay order will becancelled;appeal failing which the stay order will becancelled; (d)reserve the right to review the order passedafter expiry of reasonable period, say upto 6months, or if the assessee has notcooperated in the early disposal of appeal, orwhere a subsequent pronouncement by ahigher appellate authority or court alters theabove situations;after expiry of reasonable period, say upto 6months, or if the assessee has notcooperated in the early disposal of appeal, orwhere a subsequent pronouncement by ahigher appellate authority or court alters theabove situations; (e)reserve a right to adjust refunds arising, ifany against the demand. (iii) Payment by instalments may be liberally allowed soas to collect the entire demand within a reasonable period notexceeding 18 months. (iv) Since the phrase ‘stay of demand’ does not occurin Section 220(6) of the Income-tax Act, the Assessing officershould always use in any order passed under Section 220(6) [orunder Section 220(3) or Section 220(7)], the expression thatoccurs in the section viz, that he agrees to treat the assessee asnot being in default in respect of the amount specified, subjectto such conditions as he deems fit to impose. (v) While considering an application under Section 220(6), theAssessing Officer should consider all relevant factors having abearing on the demand raised and communicate his decision inthe form of a speaking order.” 5. Apart from this, the Assessing Officer is required to act ina fair manner and need to consider the stay petitionindependently and pass a speaking order stating reasons asto why the stay application of the petitioner is not required tobe considered, as the order passed by the Assessing Officermay either be upheld or otherwise revised by the appellateauthority. Learned counsel for the petitioner submits that, insimilar circumstances, this Court in W.P.No.29198 of 2005 hasset aside the stay rejection order passed by the AssessingOfficer and remanded the matter back to the Assessing Officerfor fresh consideration of the stay application. In the presentcase, as the order passed by the Assessing Officer in the stayapplication being a non-speaking order, the same is liable tobe set aside. 6. Accordingly, the impugned order is set aside. The 1[st] 6. Accordingly, the impugned order is set aside. The 1[st] respondent is directed to consider the stay application afreshkeeping in view the instructions in CBDT Circular No.1914dated 02.12.1993. The petitioner is given liberty to submitfurther representation and bring additional facts, if any, to thenotice of the Assessing Officer. It is needless to mention thatan opportunity of hearing may be afforded, if the petitioner sodesires. 7. Subject to the above observations, the writ petition isallowed. No costs. Miscellaneous petitions, if any pending,shall stand closed. ____________________ G. CHANDRAIAH, J 23[rd] September, 2015 ____________________________ CHALLA KODANDA RAM, J ksm